In health insurance

Health insurance

Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...

 in the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, a preferred provider organization (or "PPO", sometimes referred to as a participating provider organization or preferred provider option) is a managed care

Managed care

...intended to reduce unnecessary health care costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on...

 organization of medical doctors, hospital

Hospital

A hospital is a health care institution providing patient treatment by specialized staff and equipment. Hospitals often, but not always, provide for inpatient care or longer-term patient stays....

s, and other health care providers

Health profession

The health care industry, or medical industry, is the sector of the economic system that provides goods and services to treat patients with curative, preventive, rehabilitative, palliative, or, at times, unnecessary care...

 who have covenanted with an insurer or a third-party administrator to provide health care

Health care

Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...

 at reduced rates to the insurer's or administrator's clients.

Overview

A preferred provider organization is a subscription-based medical care arrangement. A membership allows a substantial discount below the regularly charged rates of the designated professionals partnered with the organization. Preferred provider organizations themselves earn money by charging an access fee to the insurance company for the use of their network (unlike the usual insurance with premiums and corresponding payments paid either in full or partially by the insurance provider to the medical doctor). They negotiate with providers to set fee schedules, and handle disputes between insurers and providers. PPOs can also contract with one another to strengthen their position in certain geographic areas without forming new relationships directly with providers. This will be mutually beneficial in theory, as the insurer will be billed at a reduced rate when its insureds utilize the services of the "preferred" provider and the provider will see an increase in its business as almost all and or insureds in the organization will use only providers who are members. PPOs have gained popularity in the past decade because, although they tend to have slightly higher premiums than HMOs and other more restrictive plans, they offer patients more flexibility overall.

PPO

Other features of a preferred provider organization generally include utilization review, where representatives of the insurer or administrator review the records of treatments provided to verify that they are appropriate for the condition being treated rather than largely or solely being performed to increase the amount of reimbursement due. Another near-universal feature is a pre-certification requirement, in which scheduled (non-emergency) hospital admissions and, in some instances outpatient surgery as well, must have prior approval of the insurer and often undergo "utilization review" in advance.

EPO

An exclusive provider organization (EPO) is a type of managed care plan that combines features of HMOs and PPOs. It is referred to as exclusive because the employers agree not to contract with any other plan.

See also

• Managed care
  Managed care
  ...intended to reduce unnecessary health care costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on...
  
  
• Health maintenance organization
  Health maintenance organization
  A health maintenance organization is an organization that provides managed care for health insurance contracts in the United States as a liaison with health care providers...
  
  
• Point of service plan
  Point of service plan
  A point of service plan, or POS plan, is a type of managed care health insurance system. It combines characteristics of both the HMO and the PPO. Members of a POS plan do not make a choice about which system to use until the point at which the service is being used.The POS is based on the basic...
  
  
• Independent practice association
  Independent practice association
  An independent practice association is an association of independent physicians, or other organization that contracts with independent physicians, and provides services to managed care organizations on a negotiated per capita rate, flat retainer fee, or negotiated fee-for-service basis...
  
  
• Dental plan
• Single-payer health care
  Single-payer health care
  Single-payer health care is medical care funded from a single insurance pool, run by the state. Under a single-payer system, universal health care for an entire population can be financed from a pool to which many parties employees, employers, and the state have contributed...
  
  
• Silent PPO
  Silent PPO
  A Silent PPO is an organization that accesses a discounted rate for services from a physician, hospital or other health care provider without direct authorization from the provider to do so.-Function:...